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Audit of the SEC's Physical Security Program, Report No. 523

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Audit of the SEC's Physical Security Program, Report No. 523 Audit of the SEC’s Physical Security Program August 1, 2014 Report No. 523 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D .C. 20549 OFFICE OF INSPECTOR GENERAL MEMORANDUM August 1, 2014 To: Jeffery Heslop, Chief OpJt9~fl pyc r, 0 ice of the Chief Operating Officer From: Carl W. Hoecker, lnspeWGe ~/r~l , 0 flee o Inspector General Subject: Audit of the SEC's Physical Security Program, Report No. 523 Attached is the Office of Inspector General's (OIG) final report detailing the results of our audit of the U.S. Securities and Exchange Commission's (SEC) physical security program. The report contains nine recommendations for corrective action that, if fully implemented, should strengthen the SEC's physical security controls. On July 7, 2014, we provided agency management with a draft of our report for review and comment. In the July 30, 2014, response , management fully concurred with eight of our nine recommendations and partially concurred with the remaining recommendation. As a result of management's response , we revised Recommendations 6 and 8. Management's complete response is reprinted as Appendix VII in the final report. Within the next 45 days, please provide the OIG with a written corrective action plan that addresses the recommendations. The corrective action plan should include information such as the responsible official/point of contact, timeframe for completing required actions, and milestones identifying how your office will address the recommendations. We appreciate the courtesies and cooperation extended to us during the review. If you have questions, please contact me or Rebecca L. Sharek, Deputy Inspector General for Audits, Evaluations, and Special Projects. Attachment cc: Mary Jo White, Chair Erica Y. Williams, Deputy Chief of Staff, Office of the Chair Luis A. Aguilar, Commissioner Paul Gumagay, Counsel, Office of Commissioner Aguilar Daniel M. Gallagher, Commissioner Benjamin Brown, Counsel , Office of Commissioner Gallagher Michael S. Piwowar, Commissioner Mark Uyeda, Counsel , Office of Commissioner Piwowar KaraM. Stein, Commissioner Robert Peak, Advisor to the Commissioner, Office of Commissioner Stein Anne K. Small , General Counsel , Office of the General Counsel Timothy Henseler, Director, Office of Legislative and Intergovernmental Affairs John J. Nester, Director, Office of Public Affairs Barry Walters, Director/ Chief FOIA Officer, Office of Support Operations Cedric Drawhorn , Assistant Director, Chief of Security Services, Office of Support Operations Cedric Watson, Branch Chief , Physical Security Operations, Office of Security Services, Office of Support Operations Thomas A. Bayer, Director, Office of Information Technology Pamela C. Dyson , Deputy Director, Office of Information Technology Todd K. Scharf, Associate Director, Chief Information Security Officer, Office of Information Technology Vance Cathell, Director, Office of Acquisitions Michael Whisler, Assistant Director, Office of Acquisitions Paul Levenson , Regional Director, Boston Regional Office Lynn Austin, Assistant Regional Director, Boston Regional Office Andrew M. Calamari , Regional Director, New York Regional Office Robert Keyes, Associate Regional Director, New York Regional Office Jina L. Choi , Regional Director, San Francisco Regional Office Darlene L. Pryor, Management and Program Analyst, Office of the Chief Operating Officer U .S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL Executive Summary Audit of the SEC' s Phys ical Security Program Report No. 523 August 1, 20 14 Why We Did This Audit What We Found The Government Accountability Office We visited the SEC's headquarters, three of its regional offices has designated Federal real property l(bJ(7J(FJ I and its two data centers, management as a governmentwide high­ and obtained information from personnel at the remaining SEC risk area due, in part, to the continued locations. From our observations and the information we challenge of protecting Federal facilities. obtained, we determined that improvements are needed in the At the U.S. Securities and Exchange SEC's physical security controls. Specifically, we identified the Commission (SEC), the Office of following physical security vulnerabilities: Security Services (OSS) is responsible for the physical security and safety of • facility risk assessments were incomplete, outdated, or not SEC staff and facilities at the agency's performed; 11 regional offices, 2 data centers, and • facility security plans did not identify all current or planned headquarters in Washington, D.C. In security measures; 2011 and 2012, the Office of Inspector General (OIG) investigated physical • SEC-issued badges were not always properly controlled; security violations, and recommended a • some access-controlled doors were unsecured; and review of the agency's physical security program. As a resu lt, the OIG contracted • the SEC's security system contractor monitored the agency's with Ollie Green & Company, CPA's, LLC physical access control and intrusion detection systems from (referred to as "we" in this report) to an offsite location, and did not always notify the OSS of alarm assess the SEC's policies, procedures, conditions. and controls for safeguarding personnel and preventing unauthorized access to In addition, the SEC's l(bJ(?J(FJ Ilacked the agency's faci lities. sufficient security measures to prevent unauthorized, undetected, and undocumented access to key information What We Recommended technology assets. To provide reasonable assurance that the SEC's policies, procedures, and controls During the audit, management took action to address some of effectively safeguard personnel and the conditions we observed; however, the conditions occurred prevent unauthorized access to the because the OSS did not adequately manage and administer agency's facilities, we made nine the SEC's physical security program. Specifically, we found that recommendations for corrective action. • the OSS did not establish effective policies and procedures to T he recommendations address policies address required Federal physical security standards; and procedures; risk assessments; facility security plans; issuance of badges; • the OSS did not ensure that physical security program internal access-controlled doors; contractor controls were measured and tested; performance; data center controls; and training. Management concurred with • security specialists' competencies did not always match their eight of the recommendations and assigned roles and responsibilities; and partially concurred with one • the OSS outsourced security systems responsibilities to a recommendation. T he recommendations contractor but did not provide sufficient oversight to monitor will be closed upon completion and the contractor's performance. verification of appropriate corrective action. Because this report contains The results of our audit indicate that action is required to establish sensitive information about the SEC's a comprehensive physical security program and that doing so will physical security program, we are not reduce the risk to SEC personnel, facilities , and property. re leasing it publicall y. For additional information , contact the Office of Inspector General at (202) 551 -6061 or www.sec.gov/about/offices/inspector general.shtml. U .S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL TABLE OF CONTENTS Executive Summary .....................................................................................................i Background and Objectives .......................................................................................1 Background ... .................... ............. ........ ........ .... ...... ...................... ........... .......... ...... .. 1 Objectives ........... ........................................... ................ ..............................................4 Results ........................................................................................................................5 Improvements Needed in the SEC's Physical Security Controls ......... ............ ........... ... 5 Recommendations, Management's Response, and Evaluation of Management's Response .................... .... ............ .... ........ .............................. ..... ................ ........ .. 16 Figure and Tables Figure . OSO Organizational Chart ..............................................................................2 Table 1. Factors for Determining FSL Levels ......... ............ ........................................ 26 Table 2. Summary of Facility Security Risk Assessments and FSL Determinations ... 28 Table 3. Results of Alarm Testing and Other Conditions Observed ................ .. .........32 Appendices Appendix I. Scope and Methodology ............ ........... .................................................. 20 Appendix II. ISC Standards, Best Practices, and Guidelines .............. .......... ............ 22 Appendix Il l. SEC Policies and Procedures ....... ........................................................ 25 Appendix IV. Process for Determining FSLs ...... ............... ....... ........... ....................... 26 Appendix V. SEC Facility Security Risk Assessments and FSL Determinations ........28 Appendix VI. Alarm Conditions Not Received by SEC Security and Other Conditions Noted ...... ... ........................ ...... .... .... ........ .... ...... .... .............. ............... 32 Appendix VII. Management Comments ..... .............
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